NORWALK, Conn. (5/11/15)--Efforts by the Financial Accounting Foundation (FAF) and its Private Company Council (PCC) to “improve” private entity accounting standards should not be more complex than existing U.S. generally accepted accounting principles (US GAAP).
That’s what CUNA told the FAF in a comment letter filed last week regarding a three-year review of the PCC.
The FAF is a private-sector organization responsible for oversight, administration and finances of its standard-setting boards, the Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board.
The function of the PCC is to assess a set of criteria to determine when alternatives within U.S. GAAP are warranted for private companies. The PCC then recommends such alternatives to FASB for approval.
The FAF announced a review earlier this year to determine whether the PCC is meeting its mission and to solicit information on the effectiveness of the PCC’s role, as well as on any changes that might be made to improve the PCC’s effectiveness.
“As the FAF is well aware, much of the reporting requirements of GAAP--though applicable to all entities--target the highly complex financial transactions of only a limited segment of reporting entities," reads CUNA’s letter. “We believe, therefore, that all modifications to GAAP intended to improve the standards for private entities should involve simplifying overly complex standards and/or decreasing the reporting burden of unnecessarily burdensome standards.”
CUNA asked that the FAF and its associated board and councils take time to consider the cost, benefit and relevancy of any private-entity standards. This is necessary because so many credit unions have limited staff and resources to address issues outside of credit unions’ primary mission as not-for-profit, member-owned institutions.
CUNA also believes that, while the PCC has been “generally successful” that the council could do more to engage stakeholders, specifically CUNA, when analyzing new and existing standards, when appropriate.
The letter also provided CUNA an opportunity to express concern with FASB’s proposed credit losses proposal, which CUNA believes could be detrimental to credit unions.